'No more 4-year cycles' - 5 things you need to know about Bitcoin this week

Bitcoin (BTC) has started the new week as macro signs are unusually stable.

After a quieter weekend than recent, BTC/USD managed to post its highest weekly close since February, dispelling fears that sub-$40,000 was imminent.

Instead, things are starting to tilt in favor of a more bullish outlook on shorter time frames, but as ever, nothing is certain - bulls need to tackle resistance and turn it into support, starting with levels above $42,000 "So close but so far" for this month's market.

Still, signs of renewed confidence come from increased activity in the stablecoin market, so there are very few true bears on the future right now.

As global markets stage a miraculous recovery after weeks of war tensions, Cointelegraph takes a look at the likely impact on Bitcoin in the week ahead.

Stocks Act Like They Don't Care About War Anymore

Market commentator Holger Zschaepitz said over the weekend that it might seem "crazy," but it appears that in just one month, markets have begun to forget about the ongoing Russia-Ukraine war.

After the shock of sanctions has come and gone, the main factors that sparked market volatility in previous weeks are fading, he said.

While its effects are far from being fully felt, current geopolitical realities are playing out less and less in equity markets, which are currently trending higher amid concerns over policy changes in China.

Chinese stocks have been hit hard this year, led by technology stocks, amid pressure from the government. But the policy shift that Beijing seems to have made in order to maintain stability has had the desired effect.

Asia leads the way this week, followed by Europe and the US - markets are heading higher, while Europe's Stoxx 600 has erased war damage.

“Global stock markets have rallied about $5 trillion this week on the prospect of a stimulus wave in China and oversold stock prices,” Zschaepitz noted on Monday.

"Investors shrugged off the ongoing war in Ukraine and rising interest rates. U.S. 10-year Treasury yields rose 10 basis points to 2.15%. All equities are now worth $112.4 trillion, or 133% of global GDP."

If the good news continues, attention will return to Bitcoin’s correlation with the stock market, especially the U.S. stock market, as a potential excuse for its price strength.

As noted by trading house Decentrader last week, the correlation paradigm has yet to be broken.

Analyst Filbfilb wrote in a market report: "Since the start of the Russia-Ukraine conflict, price action has been in sync with traditional markets, with a high correlation seen throughout the period, suggesting that Bitcoin remains It’s a safe-haven asset.”

How can the spell be broken? Arthur Hayes, former CEO of BitMEX, said investors may have to wait longer to know the answer, but it should be broken.

“As you can see, Bitcoin is currently closely correlated with the big tech risk assets,” he wrote in a Medium post last week.

“If we think that nominal interest rates will go higher and lead to a bear market in stocks and a recession, then Bitcoin will follow the big tech companies into a bear market. The only way to break this correlation is a narrative shift on the value of Bitcoin. In the face of rising nominal interest rates and Global stagflation, a gold bull market will break that relationship."

Which crossover will win?

Bitcoin ended the week with an impressive "engulfing candle," which brought the weekly chart to its highest close in a month.

Bitcoin is still trading around $41,000 despite last-minute attempts to weigh on the market, so it is on even stronger ground as March continues.

However, all is not as simple as it seems, and nervous analysts remain concerned about a possible spate of weakness.

Data from Cointelegraph Markets Pro and TradingView show that despite the strong close, last week’s weekly charts still featured a so-called “dead cross.”

Formed when a moving average on a shorter time frame crosses a longer moving average—usually the 50-day below the 200-day, but in this case the 20-day below the 50-day—this chart phenomenon tends to Foreshadowing impending weakness.

However, despite this, the lower time frames are not without bullish signs.

As noted by the popular Twitter account BTCfuel, BTC/USD’s break above the 100-day moving average on the daily chart is a bullish case and mimics a structure that has been in place since 2012.

“Bitcoin is now challenging the 100-day MA (red) after breaking below the MA,” he explained alongside the comparison chart.

"This is the 33-bar line after the dead cross formed, very similar to 2012. There will be a golden cross soon after that."

However, a cautious approach is very much in favor of the market still moving within a range with well-defined resistance levels, however, these resistance levels should be firmly flattened until a true trend change is confirmed.

That was the view of analyst Matthew Hyland this weekend, with $42,600 the first breakout zone for bulls.

Don't wait any longer for an outbreak, analysts say

As Cointelegraph reported, the general consensus is that Bitcoin has actually traded sideways not just this year, but all of last year.

Several well-known commentators have claimed that $29,000 and $69,000 are the range boundaries, so the price action in between is nothing but consolidation.

Still, after 15 months, people are starting to question whether Bitcoin needs to be reassessed in the context of one of its most famous characteristics — the four-year price cycle.

Based on block reward halvings that occur every 210,000 blocks (approximately every four years), the impact of halving on price performance has historically been predictable.

For example, a bullish peak occurs a year after the halving, followed by a bearish correction, and then the process slowly repeats.

This time is obviously different, because the end of 2021 does not have the same peak as in 2013 and 2017.

"We may be seeing the first signs of a 'last cycle' theory," popular analyst and statistician Willy Woo said this week.

“Since the bottom in 2019, there have been 3 relatively short bull and bear markets. i.e. no more 4-year cycles.”

Woo’s theory revolves around the crash at the top that characterizes every halving cycle. However, as supply and demand forces increase, price movements will become less predictable, which is far from a bearish feature, he said.

As such, measuring BTC/USD against its recent all-time high — and its potential to surpass it — may no longer accurately describe market strength or movement.

While similar to the so-called “super cycles” advocated by the likes of Kraken head of growth Dan Held, not everyone agrees that cycle-based price phases are no more.

"Not quite. If we had a parabolic rise in wave 5, then the same big decline would follow. But in general, yes, we can certainly expect higher lows over time and higher highs,” the popular Twitter account Credible Crypto responded when Woo unveiled the idea in October.

Tether Activity Excites Bulls

One need only look at the stablecoin action behind the scenes to assess the likelihood of continued bullishness in the crypto market.

Interaction with U.S. dollar stablecoins, which hold the largest market share, in particular, is a key indicator of overall interest in cryptocurrencies, and their trajectory is now clearly upward.

As explained by on-chain analytics firm Santiment, there were more Tether (USDT) addresses active on two days last week than at any point this year or last.

“As Bitcoin wobbles around $41,000, Tether shows that big moves are possible for cryptocurrencies,” it commented.

“Thursday (83k) and Saturday (74k) are the two largest days in 2022 in terms of addresses interacting on the network. Keep an eye out for this tapering stagnation.”

As the largest U.S. dollar stablecoin, Tether’s market capitalization now exceeds $83 billion.

Emotions shake off weeks of 'extreme fear'

There has been a glimmer of good news in the crypto market sentiment this week.

The Crypto Fear and Greed Index has moved back into "fear" territory after experiencing "extreme fear" that lasted most of March.

On Sunday, the index came in at 31/100, its highest level since March 4, suggesting that investors' worst fears based on macro factors, at least temporarily, are easing.

Last week's picture was far more pessimistic by comparison, with research suggesting that sentiment could hardly be much lower than it is now.

Meanwhile, when discussing market composition, last week's dedicated Fear & Greed Index Newsletter highlighted the ongoing struggle between bulls and bears at current levels.

“Bears built a fortress between $40,100 and $42,600,” it wrote, assessing bulls “gradually” reasserting strength until a rally to $42,600.

"This breakout will wipe out the bears and destroy their will. It will not be easy, but it must be done if the bulls plan to regain momentum," it added.